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Factors That Impact Auto Insurance Costs and How They Work

What Influences Auto Insurance Costs and How?
The amount you pay for your car insurance makes up most of the cost of owning a car. Although paying less premium and increasing your deductibles seems to be the only option to lower your insurance cost. But here is the kicker for you! There are other options that


The amount you pay for your car insurance makes up most of the cost of owning a car. Although paying less premium and increasing your deductibles seems to be the only option to lower your insurance cost.

But here is the kicker for you!

There are other options that can reduce your insurance rates markedly.

In this article, we have made a list of all the factors that affect the cost of your insurance. Some of these factors can be controlled while some can not. But knowing the factors that affect the price of your insurance can help you in making a decision when you have to choose among various insurance companies.

So let’s get started!

1- Your Demographic Information

Your demographic information plays an important role in determining the cost of your car insurance.

i. Your Age

Your age and gender can also determine the cost of your auto insurance policy. For example, young and new drivers are charged more for auto insurance because they drive more irresponsibly than adult and experienced drivers. But the price difference in premiums is not that significant.

ii. Your Area

Your insurance cost also depends upon the area where you live. If you live in a populous area, it means that there will be more cars on the roads and greater chances of accidents. Usually in an urban area where the chances of car theft, vandalism, and accidents are more than in a rural area.

So if you live in a populous urban area you will be paying more money for your car insurance.

iii. Your job

What you do for a living is another factor that will determine your car insurance rates. If you are a delivery person or a journalist who travels a lot in their daily life are going to pay more for their car insurance. Because they are at more exposure and risk of accidents.

On the other hand, if you belong to a medical professional, a teacher, or work in the police department, insurance companies will charge you less. Because the people who work in these departments are more responsible drivers.

iv. Your Marital Status

Married people drive carefully than unmarried people. So getting married especially if you are male your insurance rates can reduce significantly.

2- Car related factors

What kind of car do you own? If your car has additional safety measures? How old is your car? These are some car-related factors that can influence the cost you are going to pay for your car insurance.

i. Safety ratings

If your car safety ratings are high, your cost of car insurance will be lower. Factors that influence the safety rating of your vehicle include the presence of:

  • Airbags
  • Automatic seat belts
  • Traction controls, etc

All of these things in your car assure that there are fewer chances for you and other passengers in your car to get into an accident.

ii. Age of your car

If your car is new, the rates of your car insurance will be high. As your car gets older the cost of repair becomes much more than the actual cost of the car. So there are chances that you will buy a new car than making a claim to cover your damage.

iii. Chances of theft

Some cars are at more risk of getting stolen than others.  If your car is on the list of most stolen cars then your cost of insurance will be higher. You can reduce the cost of your insurance by installing a car alarm and other anti-theft features in your car.

iv. Size of your Car

Cars that have larger sizes have low auto insurance costs. Because they are considered safer during accidents in comparison to small cars.

Your car’s engine size also influences the cost of your car insurance. For example, if a car with a V8 engine will be expensive to insure than a car with a V4 engine.


3- Your Driving Habits

Your driving habits have a great influence on determining the cost of your auto insurance.

i. Your driving record

Your driving history is the most important factor that controls your insurance rates.  If you have a bad driving history with multiple tickets, have ever been in an accident, or have claimed auto insurance in past. The insurance companies will provide you insurance for your car at high rates. Some companies might not give you insurance if your driving history is too bad.

What’s the solution?

Luckily you can make your record better by driving more carefully in the future and avoiding any situation which is considered bad for your driving record. Also, the insurance companies will start to ignore your past mistakes after some time if your current record is just fine.

For example, an incident that does not involve any accident like tickets will stop affecting your insurance rates after three years and the accidents in which injuries have been involved will stop affecting your rates after five or six years. However, there are some incidents that will leave their mark on your driving record for a very long time like a DUI ticket. If you have ever received this ticket, your rates will be affected for at least ten years or there are chances some companies will not provide you their insurance services.

ii. How much you drive?

If you use your car for your daily commute from your home to your office, your cost of auto insurance will be high. Because you will be on roads for more time and chances of getting into accidents will be more likely. While if you do not drive your car that much, you will get car insurance at low rates.

You can also decrease your car insurance by parking your car in safe places like garages where your car is secured.

Wrapping Up

Car insurance can be expensive, by paying attention to some factors you can significantly reduce your insurance rates. By driving your car carefully and installing some security systems in your car, you can save some bucks. Some companies also give you additional discounts if you buy their home insurance or some other insurance with your auto insurance.

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